Guide Sales Tax on Meals

This guide has general information about the Massachusetts sales tax on meals. This will lead you through the basics of the sales tax on meals by explaining how to register as a vendor with the Massachusetts Department of Revenue (DOR), as well as how to collect and send this tax to the Commonwealth. The guide also contains examples of situations in which meals are tax-exempt.

Introduction

6.25% of the sales price of the meal

Massachusetts imposes a sales tax on meals sold by or bought from restaurants or any part of a store. The tax is 6.25% of the sales price of the meal. (Before August 1, 2009, the tax rate was 5%.)

Generally, food products people commonly think of as groceries are exempt from the sales tax, except if they're sold as a meal from a restaurant part of a store.

Throughout this guide, you might see phrases such as "meals tax," "meals tax vendor," "meals tax return," etc. We used these terms to make the guide easier to read, but the tax is actually a "sales tax" on meals, not a separate "meals tax."

Definitions

Meal: A meal is any food and/or beverage that has been prepared for immediate human consumption and provided by a restaurant or restaurant part of a store. A meal includes food or beverages sold as "take out" or "to go," whether they're packaged or wrapped or not, and whether they're taken from the premises of the restaurant or not.

Restaurant: A restaurant is any eating or drinking establishment (stationary or mobile, temporary or permanent) that is primarily engaged in the business of selling meals for a price. These include but are not limited to:

  • Cafes
  • Cafeterias
  • Canteen trucks or wagons
  • Catering businesses
  • Cocktail lounges and bars
  • Coffee shops
  • Diners
  • Dining rooms, including hotel and motel dining rooms
  • Ice cream or other food product stands
  • Lunch counters
  • Private or social clubs
  • Salad bars
  • Snack bars, including theatre snack bars
  • Street wagons or carts
  • Taverns
  • Vending machines or "honor snack trays" that sell snacks or candy with a sales price of $3.50 or more. Honor snack trays are open trays in which employees (in an establishment that normally doesn't sell food) can pay for snacks and candy on the honor system.

Store: A store is any establishment that does not primarily sell meals. Generally, food products for human consumption sold by stores are exempt from the sales tax.

Restaurant part: A restaurant part is an area, section or counter, etc., within a store that sells meals. Any store that contains a restaurant part must charge a sales tax on those meals. Stores that may have a restaurant part include:

  • Supermarkets
  • Grocery stores
  • Bakeries
  • Delicatessens
  • Convenience stores
  • Markets

Restaurant meal delivery company: A restaurant meal delivery company is a vendor of meals bought from restaurants to resell and deliver.

Local option meals excise: A city or town may impose a local sales tax on restaurant meal sales that come from the city or town by a vendor. The rate is .75% of the vendor's gross receipts from restaurant meal sales. This local excise, which is imposed along with the state sales tax on meals, takes effect on the first day of the calendar quarter following 30 days after acceptance by the city or town on the first day of a later calendar quarter that the city or town may designate.

Vendors

Anyone who sells meals that are subject to sales tax in Massachusetts is a meals tax vendor. If a liquor license holder operates a restaurant where meals are served, the license holder is presumed to be the meals tax vendor, whether the meals are served by the license holder or a concessionaire.

Vendor responsibilities

Massachusetts meals tax vendors are responsible for:

  • Registering with the DOR to collect the sales tax on meals
  • Collecting a 6.25% sales tax (and, where applicable, a .75% local option sales tax) on all taxable meal sales
  • Paying the full amount of tax due with the appropriate Massachusetts meals tax return on time, and
  • Keeping complete, detailed and accurate records of gross receipts from all sales, taxable or not

Out-of-state vendors who sell meals in Massachusetts generally have the same responsibilities as Massachusetts vendors.

After registering with us, we'll give you a Meals and All Beverages Sales Tax Registration Certificate (Form MT-1) for each business location. The certificate must be displayed on the business premises where customers can easily see it.

Collecting and sending sales tax on meals

As a meals tax vendor, you must add a 6.25% sales tax (and, where applicable, a .75% local option sales tax) to the selling price of every taxable transaction and collect it from the buyer. The tax must be separately stated and separately charged on all invoices, bills, displays or contracts except on those solely for alcoholic beverages.

You have to complete and send the appropriate sales tax return(s) to us, with payment in full, on or before the due date. See more details on filing and paying in "Filing & Paying Sales Tax on Meals."

Reporting taxable transactions of alcoholic and non-alcoholic beverages

You must report gross receipts from alcoholic beverages and non-alcoholic beer sales separately from food and other beverage sales on the appropriate lines of your meals tax return (Line 1b for alcoholic beverages and non-alcoholic beer; Line 1a for all meals and other beverages).

Keeping meals tax records as a vendor

As a meals tax vendor, you must keep:

  • Complete and accurate records of the gross receipts from all sales, taxable or no, and
  • Copies of tax returns together with any supporting information necessary to verify the return's accuracy

Sufficient records provide you with evidence of each transaction and must include:

  • Cash register tapes showing each transaction. It's helpful to keep separate registers (or 1 register with separate keys) for restaurant and nonrestaurant activities.
  • Alcoholic beverages bar checks (if applicable)
  • Dining room meals checks
  • A separate daily receipts book or record for taxable and nontaxable sales
  • Copies of filed sales tax on meals returns

Dining room meals checks must be numbered serially and used in sequence for all meals service, with no number being repeated for a 1-year period. They must have the name and address of the vendor and the wording: "6.25 Percent Mass. Sales Tax on Meals" with a space opposite this statement for insertion of the amount of the tax.

You can (but aren't required to) show the amounts of state and local taxes on meals as separate line items. If the state and local tax are combined, the sales check should describe that line as "state and local tax" or the menu should have a note saying that the state tax of 6.25% and local tax of .75% totaling 7% are added to the total price of the meals. All dining room meals checks must be securely tied and preserved in dated, daily bundles. The daily tax recordings must be entered in your records to substantiate the return for sales tax on meals.

Caterers must record all catering business transactions in a reservation ledger or book, stating for all meals served, all:

  • Dates of jobs
  • Names of purchasers
  • Numbers of persons served
  • Price totals, and
  • Proper amount of tax

Caterers who don't use dining room meals checks must number bills or contracts serially and keep them with the reservation book or ledger.

Records must be kept for at least 3 years from the date the return was filed or the date it was required to be filed, whichever is later. Returns may also be audited for up to 6 years for understating by more than 25% the tax that should have been reported on the return. If you failed to file a return or filed a false or fraudulent return, we may request records at any time.

Filing & Paying Sales Tax on Meals

Returns are due 20 days after the end of the filing period

Requirements

If you're a vendor collecting and sending sales tax on meals, you must file monthly returns. Returns are due 20 days after the end of the filing period, and tax payment is due with the return. You must file a return for all periods, even when no tax is due - just enter 0 in the appropriate places. All returns with 0 tax due must be filed electronically, regardless of the amount of the business' total tax liability.

You must file returns and make payments electronically if you are a business with:

  • Annual withholding liabilities
  • Sales/use tax liabilities (including sales tax on meals and telecommunications services), and
  • Room occupancy excise liabilities

that total $5,000 or more when combined together. Once your tax liability reaches the electronic filing threshold in 1 year, you must file and pay electronically for all following years, regardless of the amount due, as long as you are obliged to file 1 of the above 3 tax categories (annual withholding, sales/use tax, room occupancy) in Massachusetts.

All new businesses and existing businesses applying for an additional registration must file and make payments electronically, regardless of the amount of annual tax liability.

Submitting returns and payments

Trustee and business tax taxpayers may file returns and make payments electronically, but vendors and employers must register with us first. See Electronic Filing Thresholds Modified and Revised Electronic Filing Requirements for more information.

An electronically filed return or report is considered timely filed if it's electronically submitted (with all accurate required information) on or before the due date, before 12 a.m. EST. After submitting it, you'll receive a confirmation number and time-and-date stamp, which proves time and filing date.

For a paper return to be considered timely filed, we must receive it on or before the due date, or if delivered after the due date, it must be postmarked by the U.S. Postal Service or date-stamped by a private delivery service at least 2 days before the due date.

Correcting reporting errors

MassTaxConnect users can use the “amend” feature to change previously filed withholding, sales and use tax (including sales tax on meals) and room occupancy tax returns. Business taxpayers can also use MassTaxConnect to dispute an audit finding or a penalty by choosing "File a Dispute" under "I Want To" in their account for each tax type.

Some taxpayers have to file amended returns and applications for abatement electronically. See if electronic filing and payment requirements apply to you.

If you don't have to file electronically, you can check the amended return box on your paper return and file it the way you usually do to amend a previously filed return, or file an Application for Abatement (Form ABT) to:

  • Dispute an audit finding
  • Dispute a penalty, or
  • Dispute a responsible person determination (Form ABT must be used to dispute a responsible person determination.)

Penalties and interest charges

There are interest and penalty charges for not filing sales/use tax returns on or before the due date.

  • The penalty for late payment is 1% of the unpaid tax shown on the return per month (or fraction thereof), up to a maximum of 25%.
  • The penalty for failing to file a return by the due date is 1% of the balance due per month (or fraction thereof), up to a maximum of 25%.

If you fail to pay the tax when due, you'll also be charged interest at the federal short-term rate (which can change quarterly) plus 4%, compounded daily. Call our Customer Service Bureau at (617) 887-6367 or toll-free in Massachusetts at (800) 392-6089 for more information on these rates.

If you underpay the sales tax on meals due to neglecting or disregarding tax laws, or substantially understate a tax liability on a return, you may be subject to a penalty of 20% of the underpayment if the underpayment exceeds 10% of the tax required to be shown on the return or $1,000, whichever is greater. See here for more information.

Willful tax evasion is a felony punishable by a fine up to $100,000 for individuals or $500,000 for corporations and/or imprisonment for up to 5 years.

Willful failure to collect and pay over taxes is also a felony and is punishable by a fine up to $10,000 and/or imprisonment for up to 5 years.

Taxpayers who do not comply with the requirements to file returns, make payments or electronically submit data to us will be penalized up to $100 for each return, payment or data transfer they submitted incorrectly. See Penalty for Failure to File, Report or Pay in the Prescribed FormatRevised Electronic Filing Requirements, and Electronic Filing Thresholds Modified for more information.

Additional Resources

Taxable Sales

Meals provided by restaurants

Generally, a restaurant, or any part of a store that is considered to be a restaurant, imposes the meals tax on the sale of any food or beverage (including alcohol) that is prepared for human consumption in a way that it doesn't need any significant additional preparation or cooking to make it edible.

Example: If a restaurant serves a patron a lasagna dinner, then the dinner is taxable. However, if the restaurant also sells frozen lasagna dinners that patrons heat in their own homes, those frozen dinners aren't considered meals and therefore aren't taxable because they need additional preparation.

Example: If a patron buys a pizza and 2 cans of soda from a restaurant, then both the pizza and sodas are taxable. However, if they buy a pizza and a 2-liter bottle of soda to go, then the pizza is taxable, but the bottle of soda is exempt since it was sold in an unopened original container of at least 26 fluid ounces.

Meals provided by other establishments

Any store not ordinarily considered a restaurant must also charge a sales tax on certain food items if those items are sold in a way that they can be considered a meal. A meal includes food or beverages that don't need further significant preparation, whether or not they are packaged or wrapped and whether or not they are taken from the place where they were bought. The following stores have to charge a sales tax on the taxable meals they provide:

Bakeries: When a bakery sells food items commonly sold at snack bars, coffee shops or luncheon counters, such as taxable beverages or sandwiches, the entire bakery is considered a restaurant, and its baked goods sales are taxable except when sold in units of 6 or more for takeout. However, if the bakery in some way separates the restaurant part of the store from the rest of the store, the bakery part remains a store, and its sales generally are not taxable. In that case, only the restaurant part is considered a restaurant for tax purposes. A separate restaurant part cannot be established if taxable beverages or other meals must or may be purchased from the area, section or counter from which baked goods are sold. Some separation of space and function is necessary.

Delicatessens: A delicatessen generally is considered a store with a restaurant part. Prepared foods including meat, poultry or fish items—fried chicken or barbecued spare ribs for example—are taxable if sold heated. Sandwich meats or cheeses (sliced or whole) and whole cooked meat, poultry or fish sold unheated are not taxable.

Grocery stores, markets, supermarkets: Sales from a bakery, delicatessen or restaurant part of a grocery store, market or supermarket are taxed as previously described; sales of food products (groceries) are not taxable. However, a supermarket salad bar where shoppers buy salads and pay by weight is a restaurant for the purpose of the meals tax. Therefore, the salad is subject to tax.

Generally, the sale of prepared meat, poultry or fish items (including meat, poultry or fish parts or pieces, such as fried chicken wings or barbecued spare ribs) heated or in a combination plate is taxable.

Convenience stores: Convenience store sales of the following items are taxable:

  • Poured or fountain-type beverages
  • Combination plates sold as a unit reasonably and commonly considered a meal, heated or not
  • Single-portion entrees such as lasagna, eggplant parmesan or quiche, heated, or refrigerated if the store provides a heating unit, and prepackaged or not
  • Heated prepared foods
  • Quick meals, such as hot dogs, hamburgers, pizza or soup, heated, or refrigerated if the store provides a heating unit, and prepackaged or not
  • Sandwiches, whether or not prepackaged or heated
  • Unpackaged snacks such as fresh-popped popcorn

Video stores: A video store's sales for off-premises consumption of poured or fountain-type beverages or of unpackaged snacks, such as fresh-popped popcorn, are taxable. Prepackaged snacks sold at a video store are not taxable.

Honor snack trays and vending machines: Honor snack trays and vending machines that sell food generally are considered restaurants for purposes of the meals tax. An exception is made when the honor tray or vending machine is used to sell only snacks (food or beverage) or candy with a sales price of less than $3.50. If the sales price of any single item sold through an honor tray or vending machine is $3.50 or more, then all sales are taxable.

Restaurant meal delivery companies: A restaurant meal delivery company is a vendor of meals bought from restaurants for resale and delivery. The restaurant meal delivery company must provide a Sales Tax Resale Certificate (Form ST-4) to all restaurants on all purchases of meals that it resells and delivers to its customers. The company must also register with the DOR, collect the 6.25% sales tax (and, where applicable, the .75% local option sales tax) on the sales price paid by the retail customer for the meals (excluding separately stated delivery charges and tips) and send the tax to us.

A restaurant that sells meals to a restaurant meal delivery company must accept a Massachusetts Sales Tax Resale Certificate (Form ST-4) from that restaurant meal delivery company. Once the form is accepted, the restaurant doesn't have to collect and send the sales tax on meals to the Commonwealth. See here for more information on meals resold by restaurant meal delivery companies

For more information on a store not mentioned here, call our Customer Service Bureau at (617) 887-6367 or toll-free in Massachusetts at (800) 392-6089.

Store sales

Sales of food and beverages by the stores listed above are subject to the tax if the items are sold in a way that it could be considered a meal. The following items sold in stores are taxable:

  • Beverages: Poured beverages, such as a cup of coffee or a fountain soda.
  • Unpackaged baked goods: Unpackaged baked goods or other snacks are generally taxable unless sold in units of 6 or more to be taken out. Baked goods in units of 6 or more include any variety of items totaling 6 or more servings. For example: 2 bagels, 3 muffins and 1 danish; or a whole pie, cake, loaf of bread, etc. However, a bakery may sell any amount of unpackaged baked goods tax-free if it sells only baked goods, or if it keeps its restaurant sales separate as required by DOR regulation.
  • Hot foods: Any heated prepared food item.
  • Entrees: Single-portion-size entrees (e.g., lasagna, eggplant parmesan or quiche) prepared to be eaten immediately, if heated. Refrigerated items are also taxable if the store provides heating units (typically microwave ovens) customers can heat their entrees with. Such entrees are taxable, prepackaged or not. Frozen entrees are not taxable.
  • Combination plates: Prepared foods sold as a unit reasonably and commonly considered a meal, heated or not. Foods that are otherwise not taxable do not become taxable simply because they are purchased together. The sale of a half-pint of potato salad and a half-pint of tuna salad for off-premises consumption is not taxable unless the items are presented or served as a unit in a way that is reasonably and commonly considered a meal, such as sold as a plate or packaged as a dinner for a single price.
  • Quick meals: Meals prepared for immediate consumption such as hot dogs, hamburgers, pizza slices or soup (if heated). These are also taxable when refrigerated if the store provides heating units (typically microwave ovens) customers can heat their quick meals with. Frozen quick meals are not taxable. Selling sandwiches is taxable, prepackaged or heated.

Other types of taxable items included in sales price

The sales tax on a meal is generally based on that meal's sale price. In some situations, the sales price of a meal upon which the tax is imposed may include the tip, or related room rental or recreational admission charges. The following situations describe where some items are considered taxable:

Service charges included in the sales price of the meal: Generally, separately stated amounts labeled as service charges added to the price of a meal are included in the sales price when such amounts are part of the consideration for food and beverages. However, separately stated amounts labeled as gratuities, service charges or tips aren't included in the sales price of the meal if they are distributed by the vendor to the service employees, wait staff employees or service bartenders. If the service charges are paid only in part to the waiters or other service personnel, then the charges are included in the sales price of the meal and subject to the sales tax.

Room rentals for serving meals: If a room is rented for the purpose of serving a meal, and the room's operator provides a meal, the room charge is included in the meal price subject to the tax, separately stated or not. If a room is rented for purposes other than serving a meal, and light refreshments are provided, the sales tax only applies to the sales price of the refreshments if the charge is stated separately on both the vendor records and the customer bill. If the charges are not separately stated, the entire amount charged is subject to the sales tax.

Admission charges for entertainment or recreation: The sales tax is imposed on admission charges collected by a place of entertainment where food and/or alcoholic beverages are sold, unless all of the following requirements are met:

  • A ticket is sold and collected as evidence of the admission charge
  • The patron is not required to buy any food or beverages
  • The charge is for admission only and doesn't include any payment for food or beverages
  • The admission charges are separated from other receipts in the books and records of the place of entertainment

Discounted meals: If a vendor offers customers, upon presenting a coupon, a discount from the usual price of a meal, the tax is only due on the actual amount the vendor charges the customer. So if a restaurant offers a patron 2 meals for the usual price of 1 due to a coupon, the price of the free meal is excluded from the meals tax. See more information on discounts, coupons, and rebates here.

Exempt Sales

Restaurant sales

Certain food and beverages aren't considered meals when sold by a restaurant for taking out, and those sales are tax-exempt. These include:

  • Food sold by weight, liquid or dry measure, count or in unopened original containers or packages, such as meat products sold by the pound, provided that such foods are commonly sold in the same manner in a retail food store that is not a restaurant
  • Beverages sold in unopened original containers when sold as a unit having a capacity of at least 26 fluid ounces
  • A loaf of bread
  • A quart of milk
  • A prepackaged pint, quart, half gallon, etc. of ice cream, provided that they are commonly sold in the same manner in a retail food store that is not a restaurant. (Handpacked ice cream, regardless of size, is taxable.)

Store sales

The following items sold in stores are not taxable:

  • Beverages: Beverages sold in unopened original containers to be consumed off the premises, whether bought separately or with other foods.
  • Prepackaged snacks and prepackaged baked goods: Items such as popcorn, chips, candy, ice cream, prepackaged pastries, novelties, etc. to be eaten off the premises. Prepackaged means packaged in a sealed, unopened original container intended and marked by the manufacturer for individual sale.
  • "Party packs" and "party platters": Various meats, poultry or cheeses sold by weight or count, cut and arranged on platter(s), sold with other foods and designed to serve multiple people. Nonfood items sold as part of a party pack or party platter, such as paper plates and plastic cutlery, are subject to the sales tax. If the vendor does not separately state the charge for these items, and collect and pay over the tax, they must pay the use tax on the cost to the nonfood item vendor.

Sales to certain buyers/organizations

Meals sold to the following buyers are not taxable:

501(c)(3) organizations: Meals sold to organizations that are tax-exempt under Section 501(c)(3) of the Internal Revenue Code (certain religious, educational, charitable, or scientific organizations) or to people, organizations or groups buying meals as agents on behalf of such organizations, generally are exempt if the organization uses the meals to conduct its exempt enterprise. To claim the exemption, the buyer and its agent must give the vendor:

The vendor must ensure that these forms are complete and keep them to prove the sale was exempt. Otherwise, the vendor may have to pay the sales tax on the meal.

Elderly or handicapped persons: Meals sold to an organization of elderly or handicapped people who live in certain subsidized housing are generally tax-exempt if:

  • The organization has a Golden Age Meals Tax Exemption Certificate (Form MT-4) from DOR,
  • The vendor gets a valid Golden Age Meals Tax Exempt Purchaser Notice (Form MT-5) along with a copy of Form MT-4 from the buyer, and 
  • The vendor keeps a record of the sale

The U.S. or Massachusetts government: Meals sold directly to the U.S. or Massachusetts government, or to people, organizations or groups buying meals as their agents, are exempt. See vendor requirements for selling directly to government organizations or entities here. 

Restaurant meal delivery companies: Sales of meals by a restaurant where the buyer is a restaurant meal delivery company and intends to resell the meals as a part of business are exempt. Buyers must be registered meal vendors and must provide a Sales Tax Resale Certificate (Form ST-4) at the time of purchase. Restaurants that sell meals to restaurant meal delivery companies must keep Forms ST-4 for their records as proof that such sales are exempt. Restaurant sellers may use MassTaxConnect to verify the buyer's resale status, but they still need to keep Forms ST-4.

Meals sold by organizations

Meals sold by the following organizations are not taxable:

  • Health and day care facilities: Sales of meals prepared by employees and served in a hospital, nursing home or licensed residential or daycare facility.
  • Hot lunch program for elderly persons: Sales of government-funded meals served through qualifying school lunch programs to the elderly.
  • Churches and synagogues: Sales of meals prepared and served on the premises by members of a church or synagogue to its members and guests.
  • Educational institutions or summer camps: Sales of meals to students by educational institutions or their agents and/or sales of meals by summer camps for children or developmentally disabled individuals.
  • Certain continuing care facilities: Sales of meals to residents of certain continuing care facilities. Continuing care facilities generally are residences that charge an up-front fee for room and board plus nursing or medical services. For more detailed information, see here.

Additional Resources

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